Impact Investing in Disaster Recovery
Our hearts go out to the victims of recent natural disasters―Hurricanes Harvey, Irma and Maria, deadly earthquakes in Mexico and wildfires throughout the American West. Our instinct is to help–what can we do?
Before joining Mission Investors Exchange, I worked at organizations who led institutional responses to Hurricanes Katrina (Living Cities) and Sandy (Girl Scouts of the USA). Then, as now, the demand to help is so great that it can be overwhelming. Those experiences underscored how having a network to share knowledge and resources is crucial for an effective response.
Impact investing has a critical role to play in disaster recovery, even though its impact typically has a longer horizon than near-term disaster response. Mission Investors Exchange members are uniquely poised to help. Indeed, community building (and re-building) are among the greatest strengths of our members. Our network has significant resources to offer – from information, experience and talented individuals to financial support.
One example is Aeris, the ratings and information service for community investors. Aeris is offering free rating reports through year-end to help impact investors that want to respond to recent disasters conduct their due diligence on investments or grants in CDFIs, starting with Texas.
Our members in affected areas
Many in our community are in the hurricane-affected geographies. In Texas, member Austin Community Foundation has been making community building impact investments for years through BCL (Business and Community Lenders) Texas. BCL’s Community Impact Lending Program is giving first priority to storm-impacted counties and offering loan deferments.
Meanwhile, our Florida members are still getting their bearings after Irma. Our members there include Southwest Florida Community Foundation in Fort Myers, Jessie Ball duPont Fund* in Jacksonville, Foundation for a Healthy St. Petersburg and offices of Community Capital Management in Weston. They all point to their local United Way chapters for charitable donations and note impact investing opportunities to support rebuilding will be forthcoming.
Learning from what works
As we explore opportunities to bring our resources to recovery, it’s helpful to consider what impact investing models have worked in disaster recovery before. For example, as soon as the storm surge receded after Hurricane Sandy, a variety of new loan funds were created as impact investment vehicles for rebuilding homes and businesses.
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Surdna Foundation, along with Goldman Sachs 10,000 Small Businesses and BOC Capital Corp, created a $3.5 million loan fund for small businesses in New York City with rebuilding-related construction contracts.
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Ford Foundation was among those that contributed to the NYC Nonprofit Recovery Loan Fund which was created to help nonprofits bridge the gap between expenditures needed to support the recovery and anticipated revenues (such as grants, pledges, contract reimbursements, and FEMA insurance payments).
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Community Capital Management earmarked $100 million of bond fund assets from its flagship CRA Qualified Investment Fund to finance community and economic development programs in Sandy-affected areas. In 2005, the Fund had made a $100 million investment towards post-Hurricane Katrina and Rita recovery efforts.
After Katrina there were a handful of other impact investment vehicles that emerged too.
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The Isaiah Fund was formed at the time by faith-based organizations associated with the Interfaith Center for Corporate Responsibility. The community investment fund focused on Gulf Coast recovery. Today it is a major disaster response pooled loan fund with a national reach, hosted and managed by Bend the Arc: a Jewish Partnership for Justice.
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The Calvert Foundation introduced a Program-Related Investment (PRI) vehicle for rebuilding New Orleans in which many of our members elected to invest.
These examples just scratch the surface of the work our members have undertaken, demonstrating the resiliency of our communities and the creativity of impact investors.
